Required information [The following information applies to the questions displayed below.] The cash records and bank statement for the month of May for Diaz Entertainment are shown below. DIAZ ENTERTAINMENT Cash Account Records May 1, 2021, to May 31, 2021 Cash Balance Cash Balance May 1, 2021 + Cash Receipts − Cash Disbursements = May 31, 2021 $5,410 $11,390 $11,440 $5,360 Cash Receipts Cash Disbursements Date Desc. Amount Date Check# Desc. Amount 5/3 Sales $ 1,330 5/7 471 Legal fees $ 1,170 5/10 Sales 1,760 5/12 472 Property tax 1,540 5/17 Sales 2,390 5/15 473 Salaries 3,470 5/24 Sales 2,860 5/22 474 Advertising 1,370 5/31 Sales 3,050 5/30 475 Supplies 420 5/31 476 Salaries 3,470 $ 11,390 $ 11,440 P.O. Box 162647 Midwest Bank Member FDIC Bowlegs, OK 74830 Looking Out For You (405) 369-CASH Account Holder: Diaz Entertainment Account Number: 7772854360 124 Saddle Blvd, Bowlegs, OK 74830 Statement Date: May 31, 2021 Account Summary Beginning Balance Deposits and Credits Withdrawals and Debits Ending Balance May 1, 2021 NO. Total NO. Total May 31, 2021 $6,130 7 $9,504 9 $9,047 $6,587 Account Details Deposits and Credits Withdrawals and Debits Daily Balance Date Amount Desc. Date No. Amount Desc. Date Amount 5/4 $ 1,330 DEP 5/1 469 $ 420 CHK 5/1 $ 5,710 5/11 1,760 DEP 5/2 470 300 CHK 5/2 5,410 5/18 2,390 DEP 5/9 471 1,170 CHK 5/4 6,740 5/20 1,100 NOTE 5/11 270 NSF 5/9 5,570 5/20 47 INT 5/12 472 1,540 CHK 5/11 7,060 5/25 2,860 DEP 5/18 473 3,470 CHK 5/12 5,520 5/31 17 INT 5/20 470 EFT 5/18 4,440 5/25 474 1,370 CHK 5/20 5,117 5/31 37 SF 5/25 6,607 $ 9,504 $ 9,047 5/31 $ 6,587 Desc. DEP Customer deposit INT Interest earned SF Service fees NOTE Note collected CHK Customer check NSF Nonsufficient funds EFT Electronic funds transfer Additional information: The difference in the beginning balances in the company’s records and the bank statement relates to checks #469 and #470, which are outstanding as of April 30, 2021 (prior month). The bank made the EFT on May 20 in error. The bank accidentally charged Diaz for payment that should have been made on another account. 2. Record the necessary cash adjustments. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Total entries to the same account together when entering in the journal entry carousel.)
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Required information
[The following information applies to the questions displayed below.]
The cash records and bank statement for the month of May for Diaz Entertainment are shown below.
| DIAZ ENTERTAINMENT | ||||||||||||||
| Cash Account Records | ||||||||||||||
| May 1, 2021, to May 31, 2021 | ||||||||||||||
| Cash Balance | Cash Balance | |||||||||||||
| May 1, 2021 | + | Cash Receipts | − | Cash Disbursements | = | May 31, 2021 | ||||||||
| $5,410 | $11,390 | $11,440 | $5,360 | |||||||||||
| Cash Receipts | Cash Disbursements | |||||||||||||
| Date | Desc. | Amount | Date | Check# | Desc. | Amount | ||||||||
| 5/3 | Sales | $ | 1,330 | 5/7 | 471 | Legal fees | $ | 1,170 | ||||||
| 5/10 | Sales | 1,760 | 5/12 | 472 | Property tax | 1,540 | ||||||||
| 5/17 | Sales | 2,390 | 5/15 | 473 | Salaries | 3,470 | ||||||||
| 5/24 | Sales | 2,860 | 5/22 | 474 | Advertising | 1,370 | ||||||||
| 5/31 | Sales | 3,050 | 5/30 | 475 | Supplies | 420 | ||||||||
| 5/31 | 476 | Salaries | 3,470 | |||||||||||
| $ | 11,390 | $ | 11,440 | |||||||||||
| P.O. Box 162647 | Midwest Bank | Member FDIC | |||||||||||||||||||||||
| Bowlegs, OK 74830 | Looking Out For You | ||||||||||||||||||||||||
| (405) 369-CASH | |||||||||||||||||||||||||
| Account Holder: | Diaz Entertainment | Account Number: | 7772854360 | ||||||||||||||||||||||
| 124 Saddle Blvd, | |||||||||||||||||||||||||
| Bowlegs, OK 74830 | Statement Date: | May 31, 2021 | |||||||||||||||||||||||
| Account Summary | |||||||||||||||||||||||||
| Beginning Balance | Deposits and Credits | Withdrawals and Debits | Ending Balance | ||||||||||||||||||||||
| May 1, 2021 | NO. | Total | NO. | Total | May 31, 2021 | ||||||||||||||||||||
| $6,130 | 7 | $9,504 | 9 | $9,047 | $6,587 | ||||||||||||||||||||
| Account Details | |||||||||||||||||||||||||
| Deposits and Credits | Withdrawals and Debits | Daily Balance | |||||||||||||||||||||||
| Date | Amount | Desc. | Date | No. | Amount | Desc. | Date | Amount | |||||||||||||||||
| 5/4 | $ | 1,330 | DEP | 5/1 | 469 | $ | 420 | CHK | 5/1 | $ | 5,710 | ||||||||||||||
| 5/11 | 1,760 | DEP | 5/2 | 470 | 300 | CHK | 5/2 | 5,410 | |||||||||||||||||
| 5/18 | 2,390 | DEP | 5/9 | 471 | 1,170 | CHK | 5/4 | 6,740 | |||||||||||||||||
| 5/20 | 1,100 | NOTE | 5/11 | 270 | NSF | 5/9 | 5,570 | ||||||||||||||||||
| 5/20 | 47 | INT | 5/12 | 472 | 1,540 | CHK | 5/11 | 7,060 | |||||||||||||||||
| 5/25 | 2,860 | DEP | 5/18 | 473 | 3,470 | CHK | 5/12 | 5,520 | |||||||||||||||||
| 5/31 | 17 | INT | 5/20 | 470 | EFT | 5/18 | 4,440 | ||||||||||||||||||
| 5/25 | 474 | 1,370 | CHK | 5/20 | 5,117 | ||||||||||||||||||||
| 5/31 | 37 | SF | 5/25 | 6,607 | |||||||||||||||||||||
| $ | 9,504 | $ | 9,047 | 5/31 | $ | 6,587 | |||||||||||||||||||
| Desc. | DEP Customer deposit | INT Interest earned | SF Service fees | |||
| NOTE Note collected | CHK Customer check | NSF Nonsufficient funds | ||||
| EFT Electronic funds transfer |
Additional information:
- The difference in the beginning balances in the company’s records and the bank statement relates to checks #469 and #470, which are outstanding as of April 30, 2021 (prior month).
- The bank made the EFT on May 20 in error. The bank accidentally charged Diaz for payment that should have been made on another account.
2. Record the necessary cash adjustments. (If no entry is required for a transaction/event, select "No
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